Docomo accelerates customer growth, results still lower

NTT Docomo posted a small drop in results for the first nine months of its fiscal year, but reiterated its forecast for growth over the full year, as it maintains its focus on selling more smartphones and associated services. Revenues for the nine months to December were down 0.2 percent from a year earlier to JPY 3.363 trillion, as stronger customer growth could not offset heavy discounts offered to fight off competition. The group targets an improvement in the final quarter to reach 3.8 percent sales growth over the full year. Despite already exceeding its annual target for cost reductions, operating profit in the nine months fell 1.9 percent to JPY 688.7 billion. The Japanese operator said it plans more efficiency measures, as it targets a JPY 2.8 billion rise in annual operating profit. Net profit for the nine months was up 3.3 percent to JPY 430.2 billion and is forecast to grow 3.9 percent over the full year. 

The company accelerated net subscriber additions to 410,000 in the fiscal third quarter, including 279,000 in December alone, helped by the start of iPhone sales last September. The base totaled 62.182 million at the end of 2013, up by almost 1.2 million from a year earlier. Over the year to December, it grew smartphone users by 37.1 percent to 22.78 million, and LTE subscribers doubled to 19.02 million, with the latter expected to reach over 25 million by the end of March. Despite a 1.8 percent in the number of smartphones sold to 9.87 million in the nine months, total handset sales were still down 8.6 percent year-on-year to 16.07 million. 

Despite the growing number of smartphone users, packet data ARPU was down by JPY 30 in the past year due to discount campaigns. ARPU from "smart" services improved, to JPY 490 from JPY 400 a year ago. However, the growth was erased by the drop in voice ARPU, with the aggregate ARPU figure at JPY 4,570 over the nine months, versus JPY 4,890 a year ago. Over the full year, this is expected to drop further to JPY 4,530. 

For the spring sales season, Docomo said it plans to target the youth market and families more, as well as continue its focus on expanding LTE users, improving its channels and after-sales support and adding revenues through news services such as dmarket. It maintained its capex budget at JPY 700 billion for the full year, after JPY 472.3 billion in the first nine months.